According to TheCollegeInvestor.com, the average millennial has US$30,000 in student loan debt. With this this in mind, how do we navigate the choppy waters of paying off past debt while saving for the future? The only answer is frugal living i.e. living on a budget. This doesn’t mean living solely on Mi Goreng and swapping red wine for goon, but you do have to think carefully about what you spend your money on. My Irish upbringing has taught me plenty on the subject, so here are 10 ways to be rich on a budget.
1. Make a plan
Sorry guys, there’s no escaping it. The best way (and the first thing that you should do) to save is to create a plan and set a realistic budget. It’s going to take a little time, but nothing’s going to change unless you do the work! I talked extensively about how to plan and set up a budget that works for you in my previous post, How to Create a Foolproof Budget Plan. There are even pictures and examples to avoid any confusion. Trust me, it’ll probably take you less time to follow these steps than it took me to write them down, so I encourage you to follow them through if you’re serious about saving money and living well in the long run!
2. Buy what you can “on offer” or buy the cheaper alternative
Want to know a secret? Stores think you’re lazy. They think that you don’t know how to shop around and that you won’t care how much profit they make. Are you going to let them win? Fight the system and save money at the same time by shopping around for a cheaper substitute for that $100 jumper. They were probably made in the same factory for the same price anyway! No one’s going to know the difference. While doing the weekly shop, you could also consider buying the store brand product. They’re usually not as glamorously packaged, but because of Western product standards are still high-quality products. Bonus tip: check out the thrift shops in wealthy areas for “second-hand” designer gear.
Another way to play the system, so to speak, is to buy items “on offer”. This is what I absolutely live by! Supermarkets have offers on a range of different items on a regular basis. When food shopping, I stock up on reduced items that I use regularly, like pasta sauce and chocolate. These will keep for a few months and will definitely save me money long-term. Even just a saving of $10 a month adds up to $120 a year! When items are “on offer”, it also gives you a chance to try something new. Why not try a new ice cream brand? You’re still getting the same product, but at a cheaper price. You may even find a new favourite! Win!
3. Learn some new recipes
Cooking doesn’t have to be a bore. Think of it as your new hobby and something that you can do to strengthen your bond with a housemate, friend, family member or partner. Jamie Oliver will be your muse. You don’t even have to buy one of his 10 books! You could just create a Pinterest board of recipes you find online. See, free and fun!
The next step is to make your own lunch each day before work. Not so fun, BUT you can try one of those awesome recipes you pinned to make it more exciting, or if there are leftovers from the previous night’s dinner, you can have that. Not only will your cooking skills increase dramatically after a time, but by eating out less you will save anywhere from AU$60-$329 a week! Going out every now and again for lunch or dinner can be a nice reward that you can look forward to and appreciate after all of the home cooking you’ve done. You really will feel like you’re living the high life when you go out!
4. Go to free events
Going out to a free event is the same as going out to a paid event. You’ll have fun and experience something new, but there’s the added bonus of knowing that you are saving money. It’s a win, win scenario! No matter where you are, I’m sure there are free events or things to do in your area. You just need to look for them. If you aren’t sure, use good old Google! There’s bound to be a Trip Advisor list of Top 10 things. Your local library or community notice boards may also advertise free community events that aren’t online.
There should be something for every type of interest, although the time of year may also have an impact on available activities. Here are just a few examples of free events and activities in my area:
- Community – Jazz in the Park, WAAPA in the Park, Community Board Games Social Club, Helping Minds workshop
- Arts – Mind Your Arts programme, Perth Festival and Sculptures by the Sea
- Literature – Writers’ Week author talks and Tim Winton book signing at Dymocks bookstore
- History & culture – Perth Cultural Centre, York Festival, Fremantle Markets and a free Didgeridoo lesson at Didgeridoo Breath in Fremantle
- Food – taste testing in the Swan Valley
- Health & fitness – HBF Fitness sessions and yoga classes at Northbridge Piazza
- Nature – Cottesloe Beach, John Forrest National Park, Bibbulmun Track, Rottnest Island, Penguin Island and King’s Park and Botanic Garden
- Adventure – sand surfing in Lancelin and watch the annual Avon Descent White Water Race at Bells Rapids
5. Get financial advice
If you’re good at Maths and can handle things like superannuation, loans, and tax returns, you can probably do some research and sort these out yourself for free. I, however cannot. But that’s okay. It’s okay to ask for help. That’s what accountants and financial specialists are there for! They are experts who know what they’re doing and have the knowledge to save you a stack of cash. It costs me a few hundred dollars to use an accountant to do my tax returns, but I usually get a few thousand more than my parents do when they do their tax returns! I’m not saying that it was solely because of my accountant, (I probably pay more tax, in general) but I am confident that I wouldn’t be able to get as much back if I did it myself. Bonus tip: if you have multiple superannuation funds, do some research to find out which is the best one, then combine them to save money on account fees.
Even if you can do your tax returns yourself, it’s important to seek advice for big purchases like buying your own home. My husband and I went to see a loan specialist to figure out how much we would need to save for a home deposit, how much we could borrow, how much it would cost in repayments etc. We decided to meet with this loan specialist because he worked for a trusted company who my parents had used to buy a new house, and his company beat bank interest rates. At the meeting, we gained insight into things like stamp duty and how to avoid it, potentially saving us $20,000! It’s financially savvy to invest in financial experts. Likewise, it’s in your own interest to increase your financial knowledge by reading a new financial book every 6 months, and researching things that you are unsure about. You will be better off for it, and feel richer knowing that you are the one in control of your financial situation.
6. Spend your own money
It’s fun to go all Carrie Bradshaw from Sex and the City like the style icon you are, but do you know what’s not fun? Debt. You’ve probably got some already. Avoid further debt, if you can help it. The best way to do this is by spending your own money (cash or debit card only) and avoiding credit cards. I am firmly against credit cards because they charge interest and the amounts can add up quickly. If you can’t afford something, do you really need it now? If you do, could you find a cheaper alternative? Think of the bigger picture. Have a goal in mind, like saving for a holiday, and remind yourself that you are saving for that. (See #1.) It’s also a good idea to automate payments that you may forget about, and to pay lump sums like health insurance in one go. Why? Because health insurance companies usually increase their prices in the new financial year. If you pay your health insure every month or every few months, you will have to pay the new price whenever it changes. If you pay it all before it changes, you pay less for the same cover! Cha-ching!
7. Invest in good quality, classic pieces
I’m not a fashion blogger. I want to look good, but I don’t really go clothes shopping unless I have to because clothes are stupidly expensive! My advice: buy good quality staple items that will last. These include:
- Plain t-shirt
- Jeans
- LBD
- Black handbag
- Black flats
- Trench coat
Most things go out of fashion within a year, but these pieces have staying power. It’s a good investment to purchase the slightly more expensive versions if they are better quality and will last longer. Just use the cost per wear formula to see how much value you’re getting out of that $200 coat:
CPW = Total cost of the item / Number of days you’ll wear it
The same goes for furniture. When you get your own home, don’t feel like you have to totally furnish the place immediately. If you do, you know it’s probably going to look like an IKEA showroom. Styles change, so stick to classic designs for big investment pieces. Many people say that you should invest in pieces like sofas, storage tables and dining sets because these will last you for years, if not a lifetime. Let your space evolve as you do. If you buy an expensive item every six months, in 10 years you’ll have 20 top notch items! I’m not quite at this stage yet, but I look forward to creating a space that is uniquely me.
8. Focus on quality, not quantity
I’m going to sound like an old lady here, but we’re living in an age of complete overload. We are constantly bombarded with emails, notifications and messages. We have multiple social media accounts. There are over a billion websites in the world now. It’s easy to be overwhelmed and feel like you have to keep up with everyone else, but why do we do it? What does it achieve? If you do too many things at once, are you doing anything well? If you simplify the quantity, you amplify the quality. As this relates to your finances, what can you reduce to increase your savings? Well, you probably pay for multiple video-streaming services like Netflix, Stan and Hulu to name a few. Am I right? Choose one and cancel the rest. It’s about the quality, not the quantity. If you really can’t live without them, maybe chat to some friends, organise for each friend to have a different service and share accounts. At least you won’t be paying for all of them.
9. Be an eco-warrior
Trick yourself into thinking that you are a friend of the earth, when you are really just trying to reduce your bills. Most household water use comes from the shower. (Notice that I said shower and not a bath. Don’t even think about it!) You can save water by aiming to spend no longer than four minutes under the water. Using heating and air-conditioning on a regular basis can also cause a huge bill. Reduce costs by using them less and investing in economical appliances or environmentally friendly services like solar panels. Of course, there are always alternate methods that use literally zero energy. To stay cool, you could place a damp cloth on your head and open windows if there is a breeze. To stay warm, wear a jumper inside and snuggle up under blankets. Water, air-conditioning and heating bills are no laughing matter. This is where it really pays to be tight!
10. Avoid renting
There’s a reason people call renting a “trap”. If you’re spending hundreds of dollars a week on rent, that’s hundreds less that you have to save for things like a holiday or your own home. If you’ve got nice parents, why not continue living in the family home (rent-free) until you can afford a home deposit? I know it’s not cool, but it will be a whole lot quicker to save up that way. If my husband and I can do it, you can too! Otherwise, renting with other people (as opposed to on your own) is another option, but I wouldn’t recommend it unless you all have similar values and schedules. Living in a rave house isn’t fun when you have a meeting the next day. As well as renting a home, avoid renting items like appliances, technology and cars. It’s always cheaper to buy in the long run, and you will feel better off in the knowledge that what you have is actually yours.
Saving money and enjoying your life don’t have to be two separate things! Taking advantage of free local events (of which there usually are many) or making simple changes like buying food on offer are just two ways to be rich on a budget. Try them out today!
If you have any pearls of wisdom, let me know below. I’m sure we’d all be richer for it! For blog updates, don’t forget to subscribe to my email list or follow me on my socials.
Talk to you again soon!
Grace x
